iHeartMedia 2005 Annual Report Download - page 60

Download and view the complete annual report

Please find page 60 of the 2005 iHeartMedia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 121

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121

60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Clear Channel Communications, Inc., incorporated in Texas in 1974, is a diversified media company with three
principal business segments: radio broadcasting, Americas outdoor advertising and international outdoor
advertising. The Company’s radio broadcasting segment owns, programs and sells airtime generating revenue from
the sale of national and local advertising. The Company’s Americas and international outdoor advertising segments
own or operate advertising display faces domestically and internationally.
On April 29, 2005, the Company announced a plan to strategically realign its businesses. This plan included an
initial public offering (“IPO”) of approximately 10% of the common stock of the Company’s outdoor business,
Clear Channel Outdoor Holdings, Inc. (“CCO”), and a 100% spin-off of its live entertainment segment and sports
representation business (“Live Nation”). The Company completed the IPO on November 11, 2005 and the spin-off
on December 21, 2005. The historical results of Live Nation have been reflected as discontinued operations in the
underlying financial statements and related disclosures for all periods presented. As a result, the historical footnote
disclosures have been revised to exclude amounts related to Live Nation. See Note B for additional disclosures
related to the strategic realignment.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant
intercompany accounts have been eliminated in consolidation. Investments in nonconsolidated affiliates are
accounted for using the equity method of accounting.
Certain Reclassifications
In addition to the reclassification of discontinued operations mentioned above, the Company has reclassified
operating gains and losses to be included as a component of operating income and reclassified minority interest
expense below its provision for income taxes, to conform to current year presentation.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less.
Allowance for Doubtful Accounts
The Company evaluates the collectibility of its accounts receivable based on a combination of factors. In
circumstances where it is aware of a specific customer’s inability to meet its financial obligations, it records a
specific reserve to reduce the amounts recorded to what it believes will be collected. For all other customers, it
recognizes reserves for bad debt based on historical experience of bad debts as a percent of revenues for each
business unit, adjusted for relative improvements or deteriorations in the agings and changes in current economic
conditions. The Company believes is concentration of credit risk is limited due to the large number and the
geographic diversification of its customers.
Land Leases and Other Structure Licenses
Most of the Company’s outdoor advertising structures are located on leased land. Americas outdoor land rents are
typically paid in advance for periods ranging from one to twelve months. International outdoor land rents are paid
both in advance and in arrears, for periods ranging from one to twelve months. Most international street furniture
advertising display faces are licensed through municipalities for up to 20 years. The street furniture licenses often
include a percent of revenue to be paid along with a base rent payment. Prepaid land leases are recorded as an asset
and expensed ratably over the related rental term and license and rent payments in arrears are recorded as an
accrued liability.